The 21st century’s new “gig economy” has opened endless new opportunities for individuals to market and profit from their personal skills and assets. Firms like Uber, TaskRabbit, Airbnb*, to name a few, leverage emerging technology to connect customers to products and service providers on a microscale. This results in increased convenience for customers, lower prices and a share in what has become the future of commerce. But with these advances come questions about insurance coverage and liability.
Here, we’ll look at Airbnb and discover what the company’s liabilities are when they broker short-term rentals between homeowners and guests. Consider this hypothetical:
Your insured retails high-end pots and pans. Most of their business comes from large hotels and restaurant chains. Your insured has no brick-and-mortar store, per se, so most sales are done in the field. Employees of your ensured regularly travel to other cities to meet with buyers in person. Generally, these employees stay in national chain hotels. But recently, your insured has noticed that they can save considerable amounts on lodging expenses by housing multiple employees in Airbnbs at the same time.
Your insured sends a group of employees to Palm Springs and books a three bedroom house they found on Airbnb. While in residence at the Airbnb, one of the employees (we’ll call her Belinda) slips on loose, improperly secured tile in the bathroom and suffers serious injuries. Assume for the purposes of this scenario that Belinda was in the course and scope of employment at the time of the injury and her workers’ compensation claim is accepted.
Your options for subrogation here are murky at best. Do you try to collect from the homeowners insurance? Does Airbnb have any liability? Let’s untangle this subrogation journey.
California Law of Negligence
Our first stop is to see if there was negligence involved in the cause of the accident. To help determine this, let’s look at the California law of negligence. Most simply, the subrogating carrier is required to show:
•A duty of care (see below) was owed ✔
•There was a breach of that duty ✔
•The breach of that duty caused the claimant’s injuries ✔
•The claimant suffered legally recognized damages ✔
Check! All of the negligence requirements are met, but by whom?
Understanding Duty of Care
Property owners owe guests a duty of care to maintain premises in a reasonably safe manner. Additionally, they must warn anyone who enters their property or is staying in their home of any known hazards. When a person lawfully on the premises is injured by an unsafe condition that they were not made aware of, or that the owner should have fixed, the owner could be liable for the injury. These unsafe conditions can include, but are not limited to:
Here the property owner owed a duty of care to make sure the bathroom tiles were properly secured and not a hazard. Their breach of duty could be actual or constructive knowledge of the loose bathroom tile. If they knew about the loose tile, or should have known about it with exercise of due care, and failed to remedy it, then they breached their duty to Belinda. That loose tile caused her to fall and the fall resulted in her injuries and thus the carrier’s subrogation damages. Liability looks pretty solid on the homeowner. However, in each particular case you are going to want to make sure there aren’t any contracts that affect the liability of the parties, especially with the added complication of involvement of Airbnb.
When looking at premises liability in California, consider:
•Who owned the property?
•Who possessed it?
•Who controlled it?
•Who had a duty to maintain it?
The homeowner obviously answers “me!” to all those questions. Control is interesting, though, because you could make the reasonable leap in thinking that Airbnb was in control of the premises at the time of the accident. The home was part of their inventory and they do market the property and make a profit from its rental. But did Airbnb control the premises at the time of Belinda’s unfortunate accident?
Airbnb’s premises liability policy
Airbnb acts as an agent to secure bookings for rental properties, but is not the owner or operator of the premises and therefore does not “control” it. When guests are at the premises, they are covered under the homeowners’ insurance policy.
However, to be a good partner to their hosts, Airbnb offers “Host Protection Insurance.” This is an insurance policy that is in effect whenever a host is renting their home to guests. It’s free to hosts and provides a million dollars per occurrence for injury to guests or damage to the host’s property.
Airbnb has this great insurance plan, so you can just recover your subrogation claim from them? Not so fast. There are a number of scenarios for recovery:
- In California, homeowners don’t have to carry homeowners insurance unless the property has a mortgage. So, if there is no homeowner’s insurance policy in effect, the injury coverage would default to the Airbnb Host Protection Insurance. This is the tidiest scenario, but uncommon.
- If the Airbnb does have homeowners insurance, there could be varying levels of coverage from property to property. If the homeowner only has earthquake insurance, for example, the claim would again fall on Airbnb’s insurance.
- If the host has homeowner’s insurance that covers guests’ injuries, Airbnb’s Insurance plan stipulates that the homeowner’s insurance be tapped first and completely before it kicks in.
It’s important to note, too, that Airbnb’s insurance does not cover intentional injuries or damage to the premises.
How do you collect?
Collecting on a case involving an Airbnb can be complicated since there are so many factors and overlapping coverage issues and scenarios involved. The first step to determining where to look for collection would be to determine the amount and type of homeowner’s insurance existed in effect during the rental period. If you’re lucky and the homeowner had full coverage, you might be able to keep it simple and work with the host’s carrier. BUT:
It’s important to know that even though Airbnb might not owe a breachable duty, you should still put them on notice in order to explore the coverage that they may have available for the actual owner of that duty, the host!
Give us a call at 619-525-7626 or contact us. We’re experts in premises liability and all manners of California subrogation and always have our eyes on the legal complexities the arise from the gig economy. We would be happy to answer any questions that you have or brainstorm further on a particular fact pattern you have. If it turns out that you need a California Subrogation attorney to recoup any insurance benefits paid, we are here to help.
*Airbnb is an online service that allows homeowners to list their homes for short-term rentals.